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Foreign investors won’t liberate Cuba

Foreign Investors Won't Liberate Cuba

The billions already poured into the island have done nothing to advance civil society.

Attitudes toward the 52-year-old—though much-modified—U.S. embargo of Cuba's military dictatorship have changed a lot in recent years. But not always in the ways you might expect.

There was a time when it was not hard to find a Cuban dissident willing to criticize the embargo. Today, a great many of the island's political activists and human-rights advocates no longer believe that foreign investment helps them in their struggle for liberation. They are asking for more economic pressure on the regime from abroad, not less.

As Cuban political activist Antonio Rodiles told journalist Pablo Diaz Espi for the Spanish website Diario de Cuba last month, "We need, first and foremost, the re-establishment of basic rights and freedoms. The international pressure, which includes the American embargo, is very necessary to at least contain the impunity enjoyed by the totalitarian regime."

U.S. Chamber of Commerce President and Chief Executive Officer Thomas Donohue addresses the audience during a conference at the University of Havana May 29, 2014. Reuters

This is worth noting, not the least because of new pressures on President Obama to allow Americans to do more business in Cuba. Last month one group—made up largely of lobbyists and former U.S. bureaucrats and politicians who now make their living as consultants—sent a letter to Mr. Obama asking him to unilaterally lift some restrictions on U.S. investment and travel to Cuba.

The letter's signers say a change in U.S. policy "can help the Cuban people determine their own destiny," strengthen civil society and improve bilateral relations between the U.S. and the dictatorship. But as Cubans are not allowed to freely engage in any business transaction with a foreign entity, any new investment from the U.S. must go through the Castro brothers and their friends.

The dissident community on the island and in exile responded to the letter with indignation. "The embargo that must be eliminated is the one which totalitarianism has imposed on the Cuban people," Cuban poet and former political prisoner Raúl Rivero wrote in the Spanish daily El Mundo. As to bilateral relations, once there is a democracy, "the issues between both governments can be resolved diplomatically in 24 hours."

Cuba's Christian Liberation Movement, founded by the late Oswaldo Payá, had this to say: "To support and applaud this logic of no-rights is an act of complicity that infringes, precisely, against the potential birth of a real 'civil society.' "

Advocates for economic liberty argue that the embargo unjustly restricts American freedom: Investing abroad is central to free trade whether in South Africa during apartheid or in Castro's Cuba. That's a defensible libertarian argument. But it's a bad joke coming from signatories to the letter like Andres Fanjul, whose family made a fortune from U.S. sugar quotas or Venezuelan tycoon Gustavo Cisneros.

On a visit to Cuba last week Tom Donohue, the head of the U.S. Chamber of Commerce, reportedly commended the regime for its recent efforts to attract investment. That's a howler too.

For more than 20 years Castro has been inviting foreigners to run hotels, mine for nickel, make cement and otherwise provide capital to the island. Spaniards, Canadians, Brits, Swiss, Italians and Russians, among others, have invested billions in partnership with the government. Some of these investors have made use of confiscated American property. Millions of Europeans and Latin Americans have made Cuba a tourist destination. Hundreds of thousands of Americans now travel to the island every year.

Yet Cubans are still tyrannized. Foreign employers pay the government in hard currency, but the government pays the workforce slave wages in nearly worthless local pesos. Foreign capital funneled to the despots has only made life for ordinary Cubans worse because it has given Castro an economic lifeline and more resources with which to repress the population.

Cuban philosopher and former University of Havana Professor Alexis Jardines argued in Diario de Cuba last week that focusing on Cuba's economic problems plays into the hands of the thugs: "We shouldn't forget that in state socialism, misery is artificially provoked."

It's true that Cuba is changing slowly, but that's being driven by desperation not engagement. The Castros want to end the embargo not because they are reforming but because they are not reforming. The economy remains a train wreck. The regime can now buy all the food and medicine it wants from the U.S., but under the embargo it has to pay cash. Having defaulted on nearly $75 billion in loans from the rest of the world, it has run out of willing state creditors.

Cubans now permitted to travel abroad bring merchandise from Miami, reducing some of the privation on the island. But the regime knows well that accumulating wealth means accumulating some control of one's own destiny. That's why a foreigner caught paying an employee hard currency can end up in jail.

It can be profitable doing business in a Caribbean country with one-man rule. I get it. But the theory that a wave of foreign investment to Cuba will swamp the totalitarian boat has been tested and failed. Let's not pretend that cutting deals with plantation owners is about making Cubans better off.

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